Glossary
Plain-English glossary
Credit and bankruptcy language is designed for lawyers and lenders, not for you. Each term below gets a simple definition, why it matters, and an example.
This glossary defines 45 credit, debt collection, and bankruptcy terms in plain English, each on its own page with an example and why it matters. The one to know first: a “charge-off” means the lender wrote the debt off its books, not that you stopped owing it — the debt can still be collected or sold.
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- Answer: Responding to a LawsuitAn answer is the formal written response you file in court to a debt lawsuit, admitting or denying each claim and raising your legal defenses.
- Automatic Stay: The Collection PauseThe automatic stay is the court injunction that begins the moment a bankruptcy case is filed, generally pausing collections, lawsuits, and garnishments.
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- Bankruptcy Discharge: Ending LiabilityA bankruptcy discharge is the court order that releases you from personal liability for qualifying debts and bars creditors from trying to collect them.
- Bankruptcy Trustee: Case OverseerA bankruptcy trustee is the official appointed to oversee your bankruptcy case, review your paperwork, and manage any assets or repayment plan.
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- Cease and Desist (Collection Contact)A cease and desist request tells a debt collector to stop contacting you; the debt still exists and can still be pursued through the courts against you.
- Charge-Off: Writing Off Unpaid DebtA charge-off is when a creditor writes off your unpaid account as a loss for accounting purposes — you still owe the debt and it can hurt your credit.
- Collection Account: What It MeansA collection account is a credit report entry showing a debt was sent or sold to a collection agency; it can report for about seven years from default.
- Complaint: Starting a Debt LawsuitA complaint is the document a creditor or collector files to start a debt lawsuit, laying out who they are suing and what they claim you owe.
- Credit Counseling: Nonprofit Debt HelpCredit counseling is guidance from a nonprofit agency that reviews your budget and debts and may offer a plan to help you manage what you owe.
- Credit Freeze: Blocking New AccountsA credit freeze is a free tool that restricts access to your credit report, making it much harder for someone to open new accounts in your name.
- Credit Mix: Your Variety of AccountsCredit mix is the variety of account types you have — such as credit cards, auto loans, and mortgages — and it is one factor in credit scores.
- CROA (Credit Repair Organizations Act)CROA is the federal law regulating credit repair companies — banning advance fees and false claims, and requiring written contracts consumers can cancel.
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- Date of First Delinquency (DOFD)The date of first delinquency (DOFD) is when you first missed a payment and never caught up; it sets the clock for how long the item can report.
- Debt Buyer: Who Buys Old DebtA debt buyer is a company that purchases charged-off debts for a fraction of face value and then attempts to collect the full amount from the consumer.
- Debt Management Plan (DMP), ExplainedA debt management plan (DMP) is a structured repayment program run by a credit counseling agency to help you pay off unsecured debts over time.
- Debt Validation: Proving You OweDebt validation is your FDCPA right to make a debt collector provide information proving a debt is yours and the amount is right before collection goes on.
- Debt Verification: Proof of a DebtDebt verification is the proof a collector must obtain and mail after you dispute a debt in writing during the FDCPA's 30-day validation window.
- Default Judgment: If You Don't RespondA default judgment is a binding court ruling entered against a defendant who does not respond to a lawsuit by the deadline stated in the summons.
- Dismissal With Prejudice: For GoodA dismissal with prejudice permanently ends a debt lawsuit, generally barring the plaintiff from suing you again over the same debt in that court.
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- FCRA (Fair Credit Reporting Act)The FCRA is the federal law governing credit reports — who can see them, how long negative items stay, and your right to dispute inaccurate information.
- FDCPA: The Federal Debt Collection LawThe FDCPA is the federal law limiting what third-party debt collectors can say and do, banning harassment and creating validation and stop-contact rights.
- Form 1099-C (Cancellation of Debt)Form 1099-C reports canceled or forgiven debt of $600 or more, and the IRS may treat that forgiven amount as taxable income in some situations.
- Fraud Alert: A Free ID-Theft SafeguardA fraud alert is a free notice on your credit file that tells lenders to take extra steps to verify your identity before granting new credit.
- Furnisher: Who Reports to the BureausA furnisher is any company that supplies information about your accounts to the credit bureaus — lenders, card issuers, and collectors — with accuracy duties.
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- Levy: The Legal Seizure of Your FundsA levy is the legal seizure of money or property to satisfy a debt, such as a bank account levy after a court judgment or a tax levy by the IRS.
- Lien: A Legal Claim on Your PropertyA lien is a legal claim against your property, such as a home or car, that secures a debt and can allow the creditor to take the property if unpaid.
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- Re-Aging: Resetting a Debt's ClockRe-aging is resetting a delinquent account's aging clock; some re-aging is legitimate, but falsely resetting the date on a credit report is illegal.
- Reaffirmation Agreement: Still LiableA reaffirmation agreement is a voluntary contract in bankruptcy to remain personally liable on a debt — often a car loan — despite the discharge.
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- Secured Card Graduation: Deposit BackSecured card graduation is when your issuer upgrades your secured credit card to an unsecured one and returns your refundable security deposit.
- Secured Debt: Backed by CollateralSecured debt is debt backed by collateral the lender can take if you stop paying — like a mortgage secured by the home or an auto loan secured by the car.
- Soft Inquiry: A Painless Credit CheckA soft inquiry is a check of your credit that does not affect your credit scores, such as prequalification offers or you viewing your own report.
- Statute of Limitations: When Suits EndThe statute of limitations on debt is your state's deadline for a creditor or collector to sue you; time-barred debts may still exist and be reported.
- Summons: The Notice You're Being SuedA summons is the official court document notifying you that you are being sued, and it states the deadline to respond before you lose by default.
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- Unsecured Debt: No Collateral RequiredUnsecured debt is debt with no collateral behind it — credit cards, medical bills, most personal loans — so creditors generally must sue before seizing pay.
- Utilization Ratio: Credit You're UsingUtilization ratio is the percentage of your available revolving credit that you are currently using, and it is a major factor in credit scores.
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Educational information — not advice
This page provides general educational information about credit, debt, and consumer protections. It is not legal advice, financial advice, or credit repair services, and reading it does not create any professional relationship. Laws, procedures, deadlines, and dollar amounts vary by state and change over time.
For advice about your specific situation, consult a licensed attorney or qualified financial professional. See our full disclaimer.